Securities Lawyers Blog

Edward Matthes Accused of Misappropriating Funds – Investor Recovery

May 19, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating multiple claims that advisor Edward Matthes (Matthes) has engaged in a misappropriation scheme. Matthes, formerly registered with Mutual of Omaha Investor Services, Inc. (Mutual of Omaha) and operating out of Oconomowoc, Wisconsin, has been accused by more than 10 customers of engaging in securities fraud and misappropriating their funds.

In March 2019, Mutual of Omaha terminated Matthes employment stating that Matthes was discharged for creating fictitious account statements and diverting customer funds for his own personal use. Also in March of 2019 the Federal Bureau of Investigation (FBI) opened an investigation into Matthes for alleged misappropriation of funds. Since then over ten customers have filed complaints alleging that Matthes misappropriated funds by diverting assets into his own bank account and created fictitious account statements.

Our law firm has significant experience bringing cases on behalf of defrauded victims when their advisors engage in misappropriation schemes. Matthes activities in the sale of unapproved investment products – is a practice known in the industry as “selling away” – a serious violation of the securities laws. In the industry the term selling away refers to when a financial advisor solicits investments in companies, promissory notes, or other securities that are not pre-approved by the broker’s affiliated firm. Sometimes those investments have some legitimacy but often times these types of investments can end up being Ponzi schemes or the advisor can be engaging in the conversion of funds.

Yield Enhancement Strategy (YES) Loss Recovery

May 18, 2019 | by Staff Attorney

Several large brokerage houses have been offering their clients option-based trading strategies referred to as a Yield Enhancement Strategy (YES). These firms include UBS Financial Services, Merrill Lynch, Credit Suisse, and Morgan Stanley. According to marketing materials, the YES strategy seeks to increase returns for investors through the trading of options. These options trading program employ various options trading strategies including the iron condor.

The yield enhancement strategies present substantial risks for investors that some advisors may not be fully disclosing. Options are complicated by their very nature and most investors lack the knowledge and experience in options, margin, puts, calls necessary to understand the relative risk reward trade offs associated with yield enhancement strategies. Despite these risks Wall Street firms continue to push these strategies because they generate fees and commissions for the firm while investors shoulder the risk.

First, the name itself is misleading because yield enhancement strategy sounds as if income is going to be generated. However, writing options and generating premiums is not income. Its compensation for the risk of the option being written. One of the most popular YES strategies, the iron condor, can allow an investor to generate a larger net credit relative to downside risk.

Summit Brokerage Broker Robert Berg Subject to Customer Complaints

May 15, 2019 | by Staff Attorney

According to BrokerCheck records financial advisor Robert Berg (Berg), currently employed by Summit Brokerage Services, Inc. (Summit Brokerage) has been subject to at least three customer complaints and one bankruptcy. According to records kept by The Financial Industry Regulatory Authority (FINRA), Berg’s customer complaints allege that Berg recommended unsuitable investments and securities.

In January 2019 a customer filed a complaint alleging that Berg violated the securities laws by, among other things, engaged in aggressive and speculative investment recommendations. The claim alleged $75,000 in damages and is currently pending.

In April 2018 a customer filed a complaint alleging that Berg violated the securities laws by, among other things unauthorized withdrawal of funds. The claim resulted in an award or judgement of $16,400.

In March 2013 Berg declared bankruptcy. Such disclosures on a broker’s record can reveal a financial incentive for the broker to recommend high commission products or services. FINRA discloses information concerning a broker’s financial condition because a broker’s inability to handle their own personal finances has also been found to be material information in helping investors determine if they should allow the broker to handle their finances.

Sanctioned Broker Mohamed Yassin Subject to Excessive Trading Complaints

May 14, 2019 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Mohamed Yassin (Yassin) has been subject to at least two customer complaints, one employment termination for cause, and two regulatory matters during his career. Yassin is formerly employed by Morgan Stanley and National Securities Corporation (National Securities). The customer complaints against Yassin concern allegations of high frequency trading activity also referred to as excessive trading or churning.

In October 2018 FINRA alleged that Yassin failed to comply with an arbitration award or settlement agreement or to satisfactorily respond to a FINRA request to provide information concerning the status of compliance which triggered an industry bar and suspension.

In June 2017, Morgan Stanley discharged Yassin claiming that he failed to verbally confirm transactions prior to execution in clients’ accounts.

In April 2017 a customer filed a complaint alleging that Yassin violated the securities laws including excessive trading from 2012 until 2016 causing $2 million in damages. The claim settled for $602,717.

Peter Bakalis Accused of Forged Client Investment Paperwork

May 8, 2019 | by Staff Attorney

According to BrokerCheck records financial advisor Peter Bakalis (Bakalis), currently employed by D.H. Hill Securities, LLLP (DH Hill Securities) has been subject to at least two customer complaints, one employment termination for cause, and one regulatory investigation. According to records kept by The Financial Industry Regulatory Authority (FINRA), Bakalis’ customer complaints allege that Bakalis failed to disclose a non-traded REIT merger and forged client signatures on paperwork.

In October 2018 Bakalis was terminated by his then employer Sigma Financial Corporation when the firm claimed that it has reason to believe that the representative forged, or instructed/caused others to forge, client signatures on account opening and account transfer paperwork.

Thereafter, in December 2018 the State of Michigan Department of Insurance and Financial Services opened an investigation claiming to have received a complaint on the appropriateness of annuity surrender/transfer for 3 different clients.

Advisor Mark Lamkin Subject to Complaints Over REIT Investments

May 8, 2019 | by Staff Attorney

Advisor Mark Lamkin (Lamkin), currently employed by Calton & Associates, Inc. (Calton & Associates) has been subject to at least three customer complaints and two terminations for cause. According to a BrokerCheck report some of the customer complaints concern alternative investments and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and equipment leasing programs. The attorneys at Gana Weinstein LLP have extensive experience handling investor losses caused by these types of products.

In August 2018 Lamkin’s then employer, LPL Financial LLC (LPL) terminated Lamkin claiming that advisor received and/or benefited from loans from firm customers, failed to disclose and inadequately disclosed outside business activities, and personally engaged in and solicited other investors to participate in private investments without obtaining Firm approval.

In January 2019 a customer filed a complaint alleging that Lamkin violated the securities laws by making misrepresentations concerning an annuity product. The claim is currently pending.

In April 2019 another customer filed a complaint alleging that Lamkin violated the securities laws by making misrepresentations and an unsuitable investment in a REIT security. The claim is currently pending.

Securities America Broker Andrew Burdsall Has Investment Complaints

May 7, 2019 | by Staff Attorney

According to BrokerCheck records financial advisor Andrew Burdsall (Burdsall), currently employed by Securities America, Inc. (Securities America) has been subject to at least five customer complaints. According to records kept by The Financial Industry Regulatory Authority (FINRA), most of Burdsall’s customer complaints allege that Burdsall invested them in a fraudulent private placement security or made unsuitable investments.

In January 2019 a customer filed a complaint alleging that Burdsall violated the securities laws including that after briefly discussing the possibility of generating a monthly income plan, Burdsall placed unauthorized trades within the client’s account which resulted in a loss to his portfolio. The customer alleges $106,202.16 in damages. The claim is currently pending.

There are also four claims against Burdsall concerning the sale of fraudulent private placements including Provident Shale and Medical Capital.

Broker John Neely Subject to Regulatory Sanctions Over Unauthorized Trading

May 7, 2019 | by Staff Attorney

According to BrokerCheck records financial advisor John Neely (Neely), currently employed by St. Bernard Financial Services, Inc. (St. Bernard Financial) has been subject to at least one customer complaint, three regulatory actions, and one employment termination for cause. According to records kept by The Financial Industry Regulatory Authority (FINRA), Neely has been accused by FINRA of engaging in unauthorized trading in client accounts.

In November 2018 FINRA settled a regulatory action against Neely stating that Neely consented to sanctions and findings that he exercised discretion in effecting hundreds of transactions in two customers’ brokerage accounts without obtaining written approval from the customers to do so. FINRA also found that the customers verbally authorized Neely to exercise discretion in their accounts but that Neely never sought his firm’s approval to service either customer’s accounts on a discretionary basis. In addition, according to FINRA Neely’s firm prohibited the use of discretion in brokerage accounts altogether.

In September 2018 Neely’s then employer Berthel, Fisher & Company Financial Services, Inc. (Berthel Fisher) terminated Neely stating that he failed to respond to an inquiry from the compliance department.

Thomas Burns Subject to Complaints Over REIT Investments

May 6, 2019 | by Staff Attorney

Advisor Thomas Burns (Burns), formerly employed by Crown Capital Securities, L.P. (Crown Capital) has been subject to at least seven customer complaints and two regulatory actions. According to a BrokerCheck report some of the customer complaints concern alternative investments and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and equipment leasing programs. The attorneys at Gana Weinstein LLP have extensive experience handling investor losses caused by these types of products.

In February 2019 FINRA settled a regulatory dispute with Burns where Burns consented to sanctions and an entry of findings that he negligently made numerous mistakes causing errors and inaccuracies in identifying customer assets on alternative investment forms causing his firm to have inaccurate books and records. For instance, FINRA found that Burns mistakenly double counted assets held away from his firm in direct pension benefit plans by placing the individual holdings in their individual categories and by counting them again in the other assets category. FINRA found that Burns made computational errors in adding up holdings when calculating net worth. In addition, FINRA alleged that Burns erroneously understated the amount of existing alternative investment holdings by either unintentionally understating the value of existing tenants in common or rental holdings or by misclassifying those existing holdings as personal real estate, instead of as alternative investments.

Raymond James Advisor William Council Alleged to Have Recommended Unsuitable Energy Securities

May 6, 2019 | by Staff Attorney

According to BrokerCheck records financial advisor William Council (Council), currently employed by Raymond James & Associates, Inc. (Raymond James), has been subject to at least three customer complaints and eight financial disclosures during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA) Council has been accused by multiple customers of unsuitable investment advice concerning various investment products including energy stocks most likely including master limited partnerships (MLPs). The law offices of Gana Weinstein LLP continue to report on investor related losses and potential legal remedies due to recommendations to investor in oil and gas and commodities related investments.

In February 2019 a customer filed a complaint alleging that Council violated the securities laws by purchasing unsuitable securities causing $334,000 in damages. The claim is currently pending.

In December 2018 a customer filed a complaint alleging that Council violated the securities laws by purchasing unsuitable securities, breach of fiduciary duty, negligent misrepresentation, negligence from February 2015 through October 2015 causing $105,000 in damages. The claim settled for $28,000.

Our firm handles claims and is also investigating securities claims against brokerage firms over sales practices related to the recommendations of oil & gas and commodities products such as exchange traded notes (ETNs), structured notes, private placements, master limited partnerships (MLPs), leveraged ETFs, mutual funds, and individual stocks.